HEDGE FUND OPERATOR BAYOU MANAGEMENT, ITS EMPLOYEES SAMUEL ISRAEL III AND DANIEL E. MARINO, AND ACCOUNTING FIRM RICHMOND FAIRFIELD ASSOCIATES, ARE CHARGED WITH MISAPPROPRIATION AND FRAUD IN AN ACTION BROUGHT BY U.S. COMMODITY FUTURES TRADING COMMISSION
U.S. District Court Issues Preliminary Injunction and Appoints Receiver
WASHINGTON, D.C. – On September 29, 2005, the U.S. Commodity Futures Trading Commission (CFTC) filed a complaint in the United States District Court for the Southern District of New York, alleging misappropriation and fraud involving Connecticut hedge fund manager Bayou Management, LLC (Bayou Management), its principals, Samuel Israel III and Daniel E. Marino, and Richmond Fairfield Associates, Certified Public Accountants PLLC (Richmond Fairfield).
On the same date, these defendants consented to a preliminary injunction that (a) prohibits further violations of the provisions of the Commodity Exchange Act (CEA) and CFTC regulations charged in the complaint; (b) freezes the assets of the Defendants and those of the hedge funds; (c) requires the defendants to account for their assets; (d) appoints a receiver; and (e) prohibits the destruction of books and records.
The complaint alleges that the defendants misappropriated customer funds, acquired funds through false pretenses, engaged in unauthorized trading, and misrepresented material facts to actual and prospective investors, including the rates of return the hedge funds earned, the value of assets under management, and the existence and identity of the accounting firms that had purportedly audited the hedge funds.
The conduct is alleged to violate the CEA’s anti-fraud and false reporting provisions and certain Commission regulations.
On the same date, Israel and Marino, based upon the same conduct, pleaded guilty to criminal charges brought by the United States Attorney’s Office for the Southern District of New York, White Plains Division. The Commission coordinated its investigation with the U.S. Attorney’s Office and the U.S. Securities and Exchange Commission.
The following Division of Enforcement staff are responsible for this action: Christine Ryall, Eugene Smith, Patricia Gomersall, Joseph Rosenberg, Paul Hayeck, and Joan Manley.
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The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including matters involving foreign currency (forex) investments or suspicious Internet websites.
You may contact the CFTC at 1-866-FON-CFTC (1-866-366-2382), visit us at our Customer Protection web page: (www.cftc.gov/cftc/cftccustomer.htm), or fill out our internet report form identifying your concerns (www.cftc.gov/enf/enfform.htm).
In addition, the CFTC publishes a series of Consumer Advisories at
http://www.cftc.gov/cftc/cftccustomer.htm#advisory alerting the public to
warning signs of possible fraudulent activity and offering precautions individuals
should take before committing funds.
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